Photo: Greg Walter / Flickr
Following the worst week this year, it seemed stocks had nowhere to go but up. Unless that stock was Facebook, which dived 11 per cent to close at $34.03 today.First the scoreboard:
Dow: 12,504, +135.1, +1.0%
S&P 500: 1,315, +20.7, +1.6%
NASDAQ: 2,847, +68.4, +2.4%
And now the top stories:
- Last night, headlines crossed that China would announce new stimulus to get its slowing economy going again. Bank of America’s Ting Lu and SocGen’s Wei Yao both argued that we shouldn’t get too excited because a new stimulus would likely be much smaller than what we’ve seen recently. SocGen’s Albert Edwards spoke to an audience in Toronto earlier this weekend where he argued a hard landing would be inevitable for China. A very hard landing.
- Everyone’s still trying to figure out what happened with Facebook’s IPO, which was delayed for 30 minutes before trading for the first time. The Nasdaq exchange admitted, “it wasn’t our finest hour.” Fox Business News’ Charlie Gasparino reported that traders were seeking up to $100 million in damages for the debacle. The New York Post Has One Word For New Facebook Investors >
- Bloomberg reported that Morgan Stanley, the lead underwriter on the Facebook IPO had aggressively bought shares to keep the stock price above the $38 offering price. Unfortunately, that didn’t keep the stock from getting slammed today. On the bright side, long-term investors can now buy more shares and lower their average cost.
- In other news, industrial giant Eaton Corporation announced it would acquire electrical equipment maker Cooper for $11.8 billion. This would size up to be the third largest merger of 2012.
- Despite the rally in the stock markets, the recent trend has been to the downside. It certainly appears to have broken the 1995-pattern that ended with stocks up over 30 per cent in one year. SocGen reminded us that this year’s market action was looking a whole lot like last year’s. Even more grim, Europe’s stock market for the last three years has mirrored that of Japan’s at the beginning of their lost decade.
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